For all the talk about Greece and France and the Eurozone, it’s telling just how much our politicians are focusing on Iran. Indeed, some of the most concrete political settlements of the past few days have concerned that turbulent state. On Friday, the US Congress approved a Bill which included the blunt reminder that, ‘It shall be the policy of the United States to take all necessary measures, including military action if required, to prevent Iran from threatening the United States, its allies or Iran’s neighbours with a nuclear weapon.’ And the G8 subsequently put out a statement about oil reserves that clearly had Iran in mind. ‘Looking ahead to the likelihood of further disruptions in oil sales and the expected increased demand over the coming months,’ it read, ‘we are monitoring the situation closely and stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied.’ Those ‘further disruptions in oil sales’ are surely the embargo on Iranian oil that’s due to come in fully in June. The message for both the markets and Tehran is this: we can make do by ourselves, thank you very much.
For Barack Obama, the G8 statement serves a dual political purpose. It suggests — rightly, wrongly — that he doesn’t have the ‘wimp factor’ when it comes to Iran. And, more importantly, it also suggests that he’s got a plan when it comes to oil prices. Don’t forget, petrol has been one of the President’s most persistent problems, and represents one of the greatest threats to his second term. As the FT points out, benchmark US oil prices may have fallen recently, but they’re still some way above the $80 level that endured for much of 2010. The hope will be that tapping into oil reserves will prevent prices from heading skywards again.
And the politics are similar for David Cameron too. When he met Obama in Washington a few months ago, one of the main topics of discussion was oil reserves and how they might be deployed. Our Prime Minister may not face an election this year, but his need is almost as great. With a 3p rise in fuel duty still set for this August, he’ll know that this issue could explode, once again, around the next Autumn Statement.
Comments